Avanex Soars Over 400% in Its Debut - TheStreet

Avanex Soars Over 400% in Its Debut

Avanex and lead underwriter Morgan Stanley Dean Witter took in $216 million on the sale of 6 million shares.
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Avanex

(AVNX)

soared more than fivefold in its first hour of trading Friday as investors excitedly bid up shares of the producer of tiny photonic processors used in networking equipment.

The sizzling gains in Avanex's shares well exceeded those of

other hot new issues that began trading Friday, including

FirePond

(FIRE:Nasdaq), which quadrupled.

By midafternoon, Avanex's shares were up 149 1/2, or 415%, to 185 1/2. (It closed up 136, or 377%, at 172.)

Avanex and lead underwriter

Morgan Stanley Dean Witter

took in $216 million on the sale of 6 million shares at $36 apiece. Pre-market demand for the fiber-optic component maker was so strong that its initial offering price was cranked up 220% from a mid-range of $14. But there were more big winners before the trading had started as

Microsoft

(MSFT) - Get Report

and

MCI WorldCom

(WCOM)

had each locked in about $8.8 million from the IPO by investing in $5 million worth of shares for $13 a piece, according to an Avanex filing with the

Securities and Exchange Commission

.

In December, the company had hoped to garner just $96.6 million from the offering; now the shares are worth more than $1 billion.

MCI WorldCom,

Osicom

(FIBR) - Get Report

and

Hitachi

(HIT)

together account for nearly 95% of Avanex's sales. Most of those sales are in North America, but the company has formed distribution pacts with representatives in Europe and Japan.

Affiliates of venture capital firms

Crosspoint Venture Partners

,

Sequoia Capital

,

Jafco America Ventures

and

Mayfield Fund

own about 60% of Avanex.

"We routinely see predictions that the market for optical products will at least double by 2001," Walter Alessandrini, president and chief executive officer of Avanex, said at the

National Fiber Optic Engineers Conference

in September. "Our experience is certainly in line with those predictions for rapid growth. We have shipped more products in the current quarter than we had forecast for the entire year, and our forecasts going forward anticipate similar market acceleration."